Instructing is 4 parts personality and 1 part skill.
By that, I mean your ability to get along with people from all walks of life and your ability to empathise will count more than being able to land a C152 on 12 feet of runway. Thankfully hair raising moments are few and far between (and usually nothing to do with the student but other aircraft around you!) and you should hope to be able to relax enough to inspire confidence in your student whilst being aware of the pointers which could lead to a problem up ahead, ie; student being high and fast on approach - you know it's going to end in a go-around but they'll move heaven and earth to try and smack the thing on halfway down the short field strip before you apply full power for them!
Like the previous poster said: the errors are common so you can usually anticipate them thus avoiding the need to sweat too much but the same explanation does not always work.
VFE.